REG-Bodycote Plc: Final Results
Yesterday 07:02
Bodycote plc – 2025 Full Year Results
Good strategic progress in mixed markets
Group summary Adjusted 1 Statutory
Full year Full year Full year Full year
2025 2024 Change 2025 2024 Change
Revenue £727.1m £757.1m -4.0% £727.1m £757.1m -4.0%
Operating profit £114.3m £129.0m -11.4% £83.6m £37.9m +121%
Operating margin 15.7% 17.0% -130 bps 11.5% 5.0% +650 bps
Operating cash flow £88.6m £115.5m -23.3% £143.5m £152.6m -6.0%
Basic earnings per share 2 44.4p 48.6p -8.6% 31.0p 10.8p +187%
Full year ordinary dividend per share 23.0p 23.0p -
Core summary 1 Full year Full year Organic
2025 2024 Change
Revenue £671.6m £682.1m -0.3%
Adjusted operating profit £113.0m £125.5m -8.5%
Adjusted operating margin 16.8% 18.4%
Excludes Non-Core sites included in the Optimise programme; 2024 Core
perimeter re-stated for enlarged programme announced in July 2025
Highlights
* Executing at pace on Optimise, Perform & Grow strategy to create
a high-performing, resilient and faster growing Bodycote
* Significant steps taken to improve the quality of the Group’s
portfolio, including the disposal of ten Non-Core sites in France in 2025 and
an Aerospace & Defence (A&D) acquisition in January 2026
* Mixed market environment in FY25, with accelerating growth in A&D
and Industrial Gas Turbines (IGT) while Oil & Gas demand slowed and Automotive
and Industrial Markets remained challenging
* Group revenue £727.1m (FY24: £757.1m) with Core revenue broadly
stable organically (-0.3%); improved momentum in H2 (Core +3.2% year-on-year)
* Adjusted operating profit of £114.3m (FY24: £129.0m), ~£4m
Optimise savings partly offsetting fall in high-margin Oil & Gas revenue and
challenging Automotive & Industrial environment
* Statutory operating profit of £83.6m (FY24: £37.9m), driven by
lower level of exceptional charges
* Adjusted basic EPS of 44.4p (FY24: 48.6p), with lower profit
partly offset by reduced share count; statutory EPS increased to 31.0p (FY24:
10.8p) due to higher statutory profit
* New £80m share buyback announced, enabled by strong balance
sheet; expected to be completed by the end of 2027
* Outlook : expect to deliver Core
organic revenue growth, improved operating margins and further strategic
progress in FY26; remain confident in delivering our medium-term financial
targets
Commenting, Jim Fairbairn, Chief Executive Officer, said:
“2025 was a year of significant progress in executing our strategy,
improving the quality of the Group’s portfolio and positioning us for
growth. The Optimise programme is well underway and is delivering benefits in
line with our expectations. We are continuing to invest in a number of organic
growth projects in Specialist Technologies and in our faster-growing target
end markets. I am pleased with the development of our M&A pipeline, and in
early 2026 we completed the acquisition of Spectrum Thermal Processing,
enhancing our A&D footprint in North America. All of these actions are
improving the quality of our portfolio and creating a more resilient and
faster growing Bodycote.
“Market conditions were mixed in 2025, with continued challenges in
Automotive and Industrial Markets partly offset by accelerating growth in
Aerospace & Defence and Industrial Gas Turbines. Core organic revenue was
broadly stable for the year but grew in the second half. Margins were impacted
by mix headwinds and the low volume environment, partly offset by growing
Optimise benefits.
“In 2026 we expect to deliver Core organic revenue growth, supported by
continued strong demand in Aerospace & Defence and Industrial Gas Turbines.
Reflecting the subdued economic backdrop, conditions in Automotive and
Industrial Markets are expected to remain challenging in the near term, though
we are well positioned to capitalise when demand recovers. We expect operating
margins to improve in 2026, reflecting volume growth and further Optimise
benefits. We are mindful of the current elevated geopolitical uncertainty and
continue to monitor the situation closely. Our focus remains on delivering our
strategy at pace and we are confident in the delivery of our medium term
financial targets."
1 Adjusted performance measures and Core
measures represent the statutory results excluding certain items; Organic
measures are stated at constant currency excluding any acquisitions and
disposals in the current and prior periods. These are all considered
alternative performance measures (APMs) and a reconciliation to the nearest
IFRS equivalent to these measures is provided at the end of these 2025 Results
(hereafter ‘Report’).
2 An earnings per share reconciliation is
provided in note 6 to the consolidated financial statements.
END
Full Year Results Presentation
Bodycote will host an in-person presentation for investors and analysts at
9.30 am GMT on 11
March 2026 . The presentation will
also be webcast live. Please find connection instructions below:
Webcast:
https://www.bodycote.com/webcast2025
Conference call details:
United Kingdom local: +44 20 3936 2999
United Kingdom (Toll-free): +44 808 189 0158
Global Dial-In Numbers
(https://www.netroadshow.com/conferencing/global-numbers?confId=94290)
Participant Code: 899080
Questions can be asked online via the webcast service. A recording will also
be available after the event.
For further information, please contact:
Bodycote plc Jim Fairbairn, Group Chief Executive Ben Fidler, Chief Financial Officer Peter Lapthorn, Investor Relations & FP&A Tel: +44 1625 505 300 FTI Consulting Richard Mountain Edward Knight Tel: +44 203 727 1340
About Bodycote plc
Bodycote is the world's largest provider of thermal processing services with a
global footprint. Through Specialist Technologies and Precision Heat
Treatment, Bodycote improves the properties of metals and alloys, extending
the life of vital components for a wide range of industries, including
Aerospace, Defence, Automotive, Power Generation, Oil & Gas, Construction,
Medical and Transportation. Customers have entrusted their products to
Bodycote's care for more than 50 years. For more information, visit
www.bodycote.com .
Full Year Commentary
Core overview
Core revenue was broadly stable for the year organically, down 0.3% to
£671.6m (FY24: £682.1m), with a much improved year-on-year trend in the
second half (+3.2%) compared with the first half (-3.5%). The end market
environment was mixed, as growth accelerated through the year in A&D and IGT,
while Oil & Gas demand softened and Industrial and Automotive conditions
remained challenging. By division, growth in Precision Heat Treatment (+1.3%
organic) was offset by a decline in Specialist Technologies (-3.7% organic),
driven predominantly by lower Oil & Gas revenues including the previously
announced impact of the end of a sizable contract in the UK. Excluding the Oil
& Gas headwind, organic growth in Specialist Technologies was c.2%.
Core adjusted operating profit was £113.0m (FY24: £125.5m) with adjusted
operating margins of 16.8% (FY24: 18.4%). The lower margins reflected a mix
headwind from the decline in high-margin Specialist Technologies Oil & Gas
activity, as well as challenging market conditions in Automotive and
Industrial. These headwinds were partly offset by ~£4m benefits from the
Optimise programme, which increased through the year in line with our
expectations and supported the improved margins in the second half.
Group overview
Including Non-Core businesses, total Group revenue was 4.0% lower at £727.1m
(FY24: £757.1m). The year-on-year reduction reflected disposals and the
closure and consolidation activity under the Optimise programme. Group
adjusted operating profit was £114.3m (FY24: £129.0m), with adjusted
operating margins of 15.7% (FY24: 17.0%), reflecting the reduced Core margins
partly offset by the exit of low margin Non-Core sites.
Group statutory operating profit was £83.6m for the year (FY24: £37.9m), a
significant year-on-year increase as the lower adjusted operating profit was
more than offset by a reduced exceptional charge of £20.9m (FY24: £78.3m).
The 2025 charge related solely to the Optimise programme, while 2024 was
impacted by impairments of £46.4m and an Optimise charge of £31.9m.
Basic adjusted earnings per share were 44.4p (FY24: 48.6p). The movement
reflected lower adjusted operating profit, partly offset by a c.5% reduction
in the weighted average share count for the year as a result of the Group’s
share buyback programme. The higher statutory operating profit resulted in an
improved statutory earnings per share of 31.0p (FY24: 10.8p).
Adjusted operating cash flow was £88.6m (FY24: £115.5m), with cash
conversion of 78% (FY24: 90%). This reflected a higher level of net capital
expenditure, with increased investment to drive key organic growth
initiatives. Free cash flow was £47.5m (FY24: £70.6m), driven primarily by
the lower level of operating cash flow together with increased cash spend on
the Optimise programme.
Closing net debt excluding lease liabilities increased to £104.8m (FY24:
£68.3m), with leverage remaining low at approximately 0.6x net debt/EBITDA.
The £36.5m increase in net debt reflected free cash flow of £47.5m, more
than offset by close to £100m in shareholder returns comprising ordinary
dividend payments of £40.9m and share buyback programme spend of £57.6m.
Divisional Performance
Specialist Technologies FY 2025 FY 2024 (restated) Organic Change Change
Revenue 212.3 222.3 -3.7% -4.5%
Adjusted operating profit 57.6 65.5 -12.1%
Adjusted operating margin 27.1% 29.5% -240bps
Precision Heat Treatment FY 2025 FY 2024 (restated) Organic Change Change
Revenue 459.3 459.8 +1.3% -0.1%
Adjusted operating profit 73.7 80.4 -8.3%
Adjusted operating margin 16.0% 17.5% -150bps
Non-Core FY 2025 FY 2024 (restated) Organic Change Change
Revenue 55.5 75.0 -28.0% -26.0%
Adjusted operating profit 1.3 3.5 -62.9%
Adjusted operating margin 2.3% 4.7% -240bps
Specialist Technologies revenue declined by 3.7%
organically to £212.3m (FY24: £222.3m). The decline in revenue included a
c.40% reduction in Oil & Gas revenue, reflecting both the previously disclosed
end of a significant customer project and soft overall market demand,
particularly in the Middle East, which resulted in delays to the ramp-up of
new project wins. Excluding this decline in Oil & Gas, organic revenue rose
c.2% in the year. This reflected strong growth in A&D and IGT, partly offset
by softer demand in Automotive and Industrial Markets. Adjusted operating
profit was £57.6m (FY24: £65.5m), with operating margins reducing to 27.1%
(FY24: 29.5%), largely as a result of the drop in high-margin Oil & Gas
activity. Performance in Specialist Technologies improved considerably in the
second half, with organic growth of +0.7% (H1: -7.7%) and operating margins of
28.2% (H1: 26.0%), reflecting the acceleration in underlying growth in A&D and
IGT.
Precision Heat Treatment revenue grew by 1.3% organically
to £459.3m (FY24: £459.8m). There was strong growth in IGT, while A&D growth
accelerated in the second half (after a stable first half) as supply chain
conditions improved materially. The Automotive and Industrial market
environment remained challenging in both Europe and North America, albeit
prior year comparators eased in the second half. As a result of low volumes
and the challenging market backdrop, operating margins were 150bps lower at
16.0% (FY24: 17.5%). Benefits from the Optimise programme increased through
the year, including the gradual transfer of the retained portion of revenue
from Non-Core sites, as well as overhead reductions. These actions leave the
division well positioned to benefit when Industrial and Automotive market
conditions improve.
Strategic progress: Optimise, Perform, Grow
We continued to execute at pace on our strategy in 2025, with important
milestones achieved across all three pillars. We remain confident in
delivering on our medium-term targets and in creating a high-performing, more
resilient and faster growing Bodycote.
Optimise: we are now well progressed with the execution of
the Optimise programme, with increasing run-rate benefits being delivered. In
November 2025 we completed the sale of ten Non-Core, Automotive and Industrial
focused sites in France for net proceeds of £19m. Following the disposal, our
remaining footprint in France is focused predominantly on A&D and higher-grade
Industrial Markets. We have now closed or consolidated eight of the other 20
Non-Core sites, with cash costs to achieve this running in line with
expectations. By the end of 2026, around 85% of site closures are expected to
be complete, resulting in minimal run-rate Non-Core revenues. Overhead cost
reductions have also progressed well and are expected to be complete in the
first half of 2026. We delivered a £4m profit benefit in 2025, with a similar
c.£4m incremental benefit expected in 2026. We remain confident of reaching
our target of at least £15m run-rate benefits by mid-2027.
Perform: in 2025 we completed our Perform pilot programme,
which validated the benefits from rolling out operational excellence tools to
our plant network. Substantial benefits were seen across the pilot sites,
which comprised around 10% of the Group’s portfolio. At one Aerospace & IGT
focused site in Cincinnati, Ohio, poor throughput was limiting the capacity
available for growth. Through the pilot, the factory layout was re-organised
and a more efficient process flow was designed, which achieved a ~5 mile
reduction in the distance that parts travelled each week and saved more than
500ft 2 of production floorspace. Following the success of
the pilot programme, the full roll-out of operational excellence tools across
all Core sites was launched. This comprises two phases: first,
‘foundational’ tools including 5S (a workplace organisation methodology)
and daily management; secondly, more advanced tools and the embedding of a
continuous improvement (‘kaizen’) mindset. The first phase has progressed
well with foundational tools being embedded across our portfolio. The second
phase is now also underway and will take place across 2026-2028. By 2028, we
continue to expect the programme to deliver a benefit of c.100bps to Group
operating margins through improved productivity.
Grow: we have taken a number of steps towards accelerating
growth in our target high-growth, high-margin areas. First, following a
detailed review of our commercial capability, we reorganised our sales
structure from divisional silos into global, end market-focused teams. We also
strengthened our business development capability and updated our sales
incentives to ensure they aligned with our strategy. Secondly, to better
leverage our global footprint we have increased the emphasis on cross-selling
and collaboration, including selective use of key account management and the
establishment of a small number of cross-divisional working groups, focused on
target markets (e.g. European Defence). These efforts have yielded encouraging
early results, including a significant expansion of our Defence order pipeline
in Germany. Moving into 2026, we continue to invest in a number of key organic
expansion projects which will be commissioned in late 2026 or early 2027,
including the first S 3 P facility in Asia, increased HIP
capacity to serve Aerospace & Defence, and a new Automotive site in Mexico.
Revenue from these projects will begin to ramp-up towards the end of 2026,
with a modest headwind expected during the year from associated setup costs.
Finally, we are continuing to accelerate our organic growth efforts via both
sustainability, where we increased our zero-carbon customer offering in 2025,
as well as bolt-on M&A for which we have increased our capability and continue
to build an attractive pipeline. In January 2026 we completed the acquisition
of Spectrum Thermal Processing, an Aerospace-focused Precision Heat Treatment
business in Rhode Island, USA.
Capital allocation
Our strong balance sheet enables us to take a balanced and disciplined
approach to capital allocation, focused on improving the quality of the
Group’s portfolio, driving profitable growth and delivering sustainable
shareholder returns. This was evidenced in 2025 by the successful recycling of
capital from Non-Core areas (including £19m disposal proceeds) towards
targeted growth investment including £77m in capital expenditure. We continue
to build our M&A pipeline, which has begun to yield results with the purchase
of Spectrum Thermal Processing in January 2026. In addition we returned close
to £100m to shareholders in 2025 via dividends (£40.9m) and share buybacks
(£57.6m). We completed the fourth £30m tranche of the Group’s share
buyback programme in January 2026, taking the total amount repurchased since
the programme began in 2024 to £120m. Today we are announcing a further £80m
share buyback which is expected to be completed by the end of 2027. This
reflects both the Group’s strong balance sheet and the planned increase in
growth investment in the near term to deliver the Group’s strategy.
Sustainability
We continue to focus on sustainability as an enabler of our strategy, both
through reducing our internal energy usage and as an accelerator of our
revenue growth. In terms of our own operations, since 2019 we have delivered a
27% improvement in our energy intensity (kWh of energy consumed per £ of
revenue generated). We also made further progress towards our SBTi emissions
target of a 46% reduction in Scope 1 and 2 emissions by 2030, having now
delivered a 38% reduction versus our 2019 base year. We continue to develop
our lower-carbon service offerings: in 2025, we announced new zero-emissions
sites at Derby and Rotherham in the UK and we are also now able to offer green
premium services in Gothenburg, Sweden. Our customer carbon calculator tool,
which demonstrates the emissions savings achievable through using our
services, now covers processes representing around 80% of Group revenues and
has been independently validated by Bureau Veritas. We are in active
conversations with a number of our larger customers around these offerings.
Outlook
We expect to deliver Core organic revenue growth in 2026, led by continued
strong demand in A&D and IGT. Reflecting the subdued economic backdrop,
conditions in Automotive and Industrial Markets are likely to remain
challenging in the near term, though we are well positioned to capitalise when
demand recovers. We expect operating margins to improve in 2026, reflecting
volume growth and further Optimise benefits, partly offset by a normalisation
of variable remuneration which has been lower than usual in 2024 and 2025. We
are mindful of the current elevated geopolitical uncertainty and continue to
monitor the situation closely. Our focus remains on executing our strategy at
pace and we are confident in the delivery of our medium term targets.
Chief Financial Officer’s Review
“Despite mixed end-market conditions, our core revenue remained stable and
we made significant progress on our efforts to improve the quality of the
Group’s portfolio.
Margins were impacted by reduced Oil & Gas work offset by starting to
see the benefit of our Optimise savings.”
Ben Fidler
Chief Financial Officer
Financial overview
2025 2024
£m £m
Revenue 727.1 757.1
Adjusted operating profit 114.3 129.0
Exceptional items (20.9) (78.3)
Amortisation of acquired intangible assets (9.7) (10.4)
Acquisition costs (0.1) (2.4)
Operating profit 83.6 37.9
Net finance charge (9.1) (9.5)
Profit before taxation 74.5 28.4
Taxation charge (19.1) (7.7)
Profit for the year 55.4 20.7
Group revenue decreased by 4.0% to £727.1m (2024: £757.1m) at actual
exchange rates and 2.8% at constant currency. The fall in revenue reflected a
£19.5m reduction in our non-core segment as we continued to execute our
Optimise strategy at pace and exit non-core sites. Reflecting mixed end market
conditions, at constant FX rates our core business revenue of £671.6m (2024:
£682.1m) was broadly stable, down 0.3%.
Adjusted operating profit decreased by 11.4% to £114.3m (2024: £129.0m),
down 10.0% at constant currency, reflecting the fall in high-margin Oil & Gas
revenue in the year and a challenging Automotive & Industrial environment,
partly offset by the benefit of £4m of savings delivered through our Optimise
programme.
These trends resulted in a reduction in Adjusted Operating Profit margin of
130bps to 15.7% (2024: 17.0%).
Statutory operating profit increased to £83.6m (2024: £37.9m) after a
reduced charge of £20.9m (2024: £78.3m) for exceptional items (see below).
Exceptional items
In 2024 the Group announced the Optimise programme which is designed to
enhance the quality of the Group’s portfolio. The programme is focused on
closing and consolidating a set of ‘Non-Core’ sites as well as delivering
overhead savings. The Non-Core sites operate in challenging end markets and
regions, as well as typically utilising older and more commoditised
technologies with higher carbon footprints. The programme was extended in 2025
to a total of 31 sites. Of this total, eight sites have now been fully closed
and in November 2025 the Group sold a further ten Non-Core sites in France
that primarily served automotive and industrial markets, for a cash
consideration of £19.3m.
Exceptional items for the year were £20.9m (2024: £78.3m) and solely
reflected the Group’s Optimise programme (2024: £31.9m related to the
Optimise programme, £18.0m related to goodwill impairment and £28.4m ERP
impairment).
Further detail can be found in note 3 to the financial statements.
Net finance charge
The net finance charge reduced to £9.1m (2024: £9.5m), as summarised in the
table below:
2025 2024
£m £m
Interest on loans and bank overdrafts (3.7) (3.9)
Lease and other interest charges (2.6) (3.0)
Finance and bank charges (3.2) (3.4)
Total finance charges (9.5) (10.3)
Interest received 0.4 0.8
Net finance charge (9.1) (9.5)
The decrease in net finance charges during the year was driven primarily by
lower lease interest as leases were exited as part of actions resulting from
the Optimise programme.
Profit before taxation
2025 2024
£m £m
Adjusted profit before taxation 105.2 119.5
Exceptional items (20.9) (78.3)
Amortisation of acquired intangible assets (9.7) (10.4)
Acquisition costs (0.1) (2.4)
Profit before taxation 74.5 28.4
Adjusted profit before tax was £105.2m (2024: £119.5m) at actual exchange
rates, driven by the reduction in adjusted operating profit described above.
Statutory profit before taxation increased to £74.5m (2024: £28.4m)
reflecting the reduced impact of exceptional charges of £20.9m (2024:
£78.3m), as well as a fall in acquisition costs due to reduced acquisition
activity in the year.
Taxation
The tax charge for the year was £19.1m (2024: £7.7m). Before accounting for
amortisation of acquired intangibles, acquisition costs and exceptional items,
the adjusted tax rate for the Group was 24.9% (2024:
23.8%). The Group’s overall tax rate reflects the blended average of the tax
rates in the jurisdictions around the world in which the Group trades and
generates profit and so is impacted by changes to the mix of profit
generation. Looking ahead, the adjusted tax rate is expected to moderately
increase over the mid-term, reflecting the expected growth in different
geographies.
The effective statutory tax rate was 25.6% (2024: 27.1%)
with the decrease primarily due to the exceptional goodwill impairment in 2024
not being deductible for tax. Provisions of £23.8m (2024: £24.9m) are
carried in respect of potential future tax assessments related to ‘open’
historical tax years. Note 5 of the consolidated financial statements provides
more information.
The OECD Pillar II Rules for a global minimum tax rate have been applicable to
the Group from 1 January 2024. The changes have not had a material impact on
the Group’s tax charge in 2025.
Pension scheme
In December 2025 the Group completed a buy-in for its UK pension scheme. This
had no net cash cost, secures the benefits for the scheme’s 680 members and
removes the Group’s exposure to future risk around asset performance.
Return on capital employed
Return on capital employed decreased by 150bps in the year to 14.2% from 15.7%
in 2024. The decrease was driven by the 130bps reduction in adjusted operating
profit margins, with capital employed being broadly stable.
Earnings per share
Basic adjusted earnings per share decreased 8.6% to 44.4p (2024: 48.6p),
reflecting the lower operating profit, partly offset by the impact of the
share buyback programme. Basic statutory earnings per share for the year
increased to 31.0p (2024: 10.8p), reflecting the lower level of exceptional
charges recorded in the year. See note 6 of the consolidated financial
statements for further details of these calculations.
2025 2024
£m £m
Profit for the year 55.4 20.7
Attributed to non-controlling interests 0.5 0.7
Earnings attributable to equity 54.9 20.0
holders of the parent
Weighted average number of 176,816,708 186,012,493
ordinary shares in issue
Basic adjusted EPS 44.4 48.6
Basic EPS 31.0 10.8
Capital expenditure
Total capital expenditure in the year was £77.0m (2024: £60.5m). The
increase year-on-year was driven by increased investment in key growth and
modernisation projects, alongside a lower level of PP&E disposals. The Group
remains committed to maintaining its assets to the highest standards of
quality and safety whilst maintaining good discipline around its capital
expenditure.
Management cash flow
2025 2024
£m £m £m
Adjusted operating profit 114.3 129.0
Depreciation and amortisation 70.8 75.3
Other, including impairment and profit on disposal of PPE (0.4) (5.6)
Adjusted EBITDA 1 184.7 198.7
Net capital expenditure (77.0) (60.5)
Principal elements of lease payments (13.8) (13.5)
Provisions movement 0.4 (7.3)
Net working capital movement (5.7) (1.9)
Adjusted operating cash flow 88.6 115.5
Restructuring (14.3) (3.9)
Net finance costs (8.2) (8.9)
Net tax payments (18.6) (32.1)
Free cash flow 47.5 70.6
Net lease liability additions and disposals 2.7 (0.7)
Ordinary dividend (40.9) (42.9)
Net disposal/(acquisition) cash flow 17.5 (55.6)
Ordinary shares purchased for share buyback programme (57.6) (57.7)
Own shares purchased less share-based payments 3.4 0.6
Increase in net debt (27.4) (85.7)
Opening net debt (131.8) (51.7)
Foreign exchange movements (6.4) 5.6
Closing net debt (165.6) (131.8)
Lease Liabilities 60.8 63.5
Net debt excluding lease liabilities (104.8) (68.3)
1 Refer to page 194 and note 22 of the 2025 Annual Report
for a reconciliation of Adjusted EBITDA to EBITDA and note 22 of the 2025
Annual Report for a reconciliation of operating profit to EBITDA.
Adjusted operating cash flow decreased to £88.6m (2024: £115.5m) as a result
of decreased operating profit and higher capital spend as the Group has begun
investment in key growth initiatives. Operating cash conversion fell to 78%
(2024: 90%), principally due to the increased capex investment.
Free cash flow fell to £47.5m (2024: £70.6m) for the year principally due to
the reduced adjusted operating cash flow as well as increased cash outflows in
respect of the Optimise programme, partly offset by reduced tax outflows. The
statutory measure, net cash from operating activities, fell to £143.5m (2024:
£152.6m) as the lower profit was partly offset by decreased cash tax
outflows.
Closing net debt was £165.6m (2024: £131.8m) and £104.8m (2024: £68.3m)
excluding lease liabilities, representing a net debt/adjusted EBITDA ratio of
0.6x.
Dividend and dividend policy
The Group has a 38-year track record of growing or maintaining the dividend
and aims to pay ordinary dividends so that cover will be at or above 2.0x
earnings on a ‘normalised’ multi-year basis.
In line with this policy, the Board has recommended a final dividend of 16.1p
(2024: 16.1p), bringing the full year dividend to 23.0p (2024: 23.0p). The
interim dividend of 6.9p was paid on 6 November 2025 to shareholders on the
register at the close of business on 3 October 2025. Subject to shareholder
approval at the 2026 AGM, the final dividend will be paid on 11 June 2025 to
shareholders on the register at the close of business on 1 May 2026.
Borrowing facilities
During the year the Group exercised an option to extend the maturity date of
its Revolving Credit Facility (‘RCF’) to 19 September 2030.
An option to extend by a further one year is executable up to 19
September 2026. The Group is financed by a mix of cash flows from
operations, short-term borrowings and leases. The Group’s funding policy
aims to ensure continuity of financing at a reasonable cost, based on
committed and uncommitted facilities and loans to be procured from several
banking partners. The Group continues to have access to committed facilities
at competitive rates and deems this to be an effective means of long-term
funding. At 31 December 2025, the facility was drawn as follows:
Facility Facility utilisation Facility headroom
£m £m £m
Revolving Credit Facility 251.0 129.2 121.8
In addition to the Revolving Credit Facility, the Group also has access to
additional committed facilities of £9.2m and cash of £25.2m, taking total
committed facility headroom to £156.2m at 31 December 2025 (2024: £194.5m).
Alternative performance measures
To provide additional information and analysis and to enable a full
understanding of the Group’s results, management makes use of a number of
APMs in its internal management of the business and as part of its internal
and external reporting. Definitions of these alternative performance measures,
the reasons why they are used, along with reconciliations to equivalent IFRS
measures can be found in the 2025 Annual Report.
Going concern
The Directors have formed a judgement, at the time of approving the financial
statements, that there are no material uncertainties that cast doubt on the
Group’s going concern status and that they have a reasonable expectation
that the Group has adequate resources to continue in operational existence for
at least the next 12 months. In making this judgement, they have considered
the impacts of potential severe but plausible consequences arising from the
Group’s activities. For this reason, the Directors continue to adopt the
going concern basis in preparing the consolidated financial statements.
Directors’ responsibilities statement
This responsibilities statement has been prepared in connection with the Group
consolidated financial statements,
extracts of which are included within this announcement. The Directors confirm
that to the best of their knowledge:
* The condensed consolidated financial statements included in this
document are derived from the audited consolidated financial statements of the
Group, prepared in accordance with UK-adopted international accounting
standards (they do not contain sufficient information to comply with
UK-adopted international accounting standards);
* The Group's consolidated financial statements, prepared in
accordance with UK-adopted international accounting standards, give a true and
fair view of the assets, liabilities, financial position, cash flows and
profit of the Group;
* There have been no significant individual related party
transactions during the year;
* There have been no significant changes in the Group's related
party relationships from that reported in the half-yearly results for the six
months ended 30 June 2025; and
* The Strategic Report includes a fair review of the development
and performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ Report is
approved:
* So far as the Director is aware, there is no relevant audit
information of which the Group’s auditors are unaware; and
* They have taken all steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit information
and to establish that the Group’s or Company’s auditor are aware of that
information.
The Group's consolidated financial statements, and related notes, including
this responsibilities statement, were
approved by the Board and authorised for issue on 11 March 2026 and were
signed on their behalf by:
By order of the Board,
Director Director
J. Fairbairn B. Fidler
Audited financial information
The condensed consolidated financial statements and notes 1 to 12 for the year
ended 31 December 2025 included
below are derived from the Group’s consolidated financial statements which
have been audited by
PricewaterhouseCoopers LLP. The unmodified audit report is available for
inspection at the Group’s registered office.
Consolidated income statement
For the year ended 31 December 2025
2025 2024
Note £m £m
Revenue 1 727.1 757.1
Cost of sales and overheads 1 2 (627.0) (647.8)
Other operating income 1 2 6.5 9.7
Other operating expenses 1 2 (0.7) (0.4)
Net impairment losses on financial assets 1 (1.4) (2.4)
Operating profit before exceptional items 1,2 104.5 116.2
Exceptional items 3 (20.9) (78.3)
Operating profit 2 83.6 37.9
Finance income 0.4 0.8
Finance charges (9.5) (10.3)
Profit before taxation 74.5 28.4
Taxation charge 4 (19.1) (7.7)
Profit for the Year 55.4 20.7
Attributable to:
Equity holders of the Parent 54.9 20.0
Non-controlling interests 0.5 0.7
55.4 20.7
Earnings per share 5 Pence Pence
Basic 31.0 10.8
Diluted 31.0 10.7
1 Excludes exceptional items. Total cost of sales and
overheads including exceptional items are £627.8m (2024: £648.5m), other
operating income including exceptional items are £8.6m (2024: £9.7m), other
operating expenses including exceptional items are £23.0m (2024: £77.7m),
and net impairment losses on financial assets are £1.3m (2024: £2.7m).
Consolidated statement of comprehensive income
For the year ended 31 December 2025
2025 2024
£m £m
Profit for the Year 55.4 20.7
Items that will not be reclassified to profit or loss:
Actuarial gains/(losses) on defined benefit pension schemes 1.4 (0.3)
Tax on retirement benefit obligations that will not be reclassified - (0.1)
Total items that will not be reclassified to profit or loss 1.4 (0.4)
Items that may be reclassified subsequently to profit or loss:
Exchange losses on translation of overseas operations (10.5) (13.8)
Movements on hedges of net investments (6.9) 4.1
Movements on cash flow hedges 0.1 (0.1)
Total items that may be reclassified subsequently to profit or loss (17.3) (9.8)
Total other comprehensive expense for the year (15.9) (10.2)
Total comprehensive income for the year 39.5 10.5
Attributable to:
Equity holders of the parent 39.5 10.1
Non-controlling interests - 0.4
39.5 10.5
Consolidated balance sheet
For the year ended 31 December 2025
2025 2024
Note £m £m
Non-current assets
Goodwill 6 200.5 207.0
Other intangible assets 99.2 114.4
Property, plant and equipment 477.7 481.2
Right-of-use assets 54.3 56.4
Deferred tax assets 3.4 7.0
Trade and other receivables 2.6 2.8
837.7 868.8
Current assets
Inventories 28.7 28.1
Current tax assets 13.0 10.1
Trade and other receivables 145.2 141.3
Cash and bank balances 25.2 19.1
212.1 198.6
Assets held for sale 3.8 -
Total assets 1,053.6 1,067.4
Current liabilities
Trade and other payables 122.2 146.7
Current tax liabilities 4 34.3 32.2
Borrowings (restated) 1 0.8 3.1
Lease liabilities 13.6 13.1
Provisions 13.1 11.9
184.0 207.0
Net current assets/(liabilities) 1 28.1 (8.4)
Non-current liabilities
Borrowings (restated) 1 129.2 84.3
Lease liabilities 47.2 50.4
Retirement benefit obligations 10.3 11.3
Deferred tax liabilities 38.6 41.2
Provisions 7 2.2 2.5
Other payables 0.2 0.8
227.7 190.5
Total liabilities 411.7 397.5
Net assets 641.9 669.9
Equity
Share capital 8 30.0 31.6
Share premium account 177.1 177.1
Own shares (6.5) (11.1)
Translation reserves 28.8 38.8
Other reserves 135.5 141.3
Retained earnings 275.3 290.4
Equity attributable to equity holders of the parent 640.2 668.1
Non-controlling interests 1.7 1.8
Total equity 641.9 669.9
1 In 2025 the Group reclassified its Revolving Credit
Facility liability to present it as a non-current liability. See note 15 of
the 2025 Annual Report for details.
Consolidated cash flow statement
For the year ended 31 December 2025
2025 2024
Note £m £m
Net cash from operating activities 10 143.5 152.6
Investing activities
Purchases of property, plant and equipment (76.4) (70.1)
Proceeds on disposal of property, plant and equipment 4.7 13.4
Purchases of other intangible assets (2.1) (4.1)
Acquisition of businesses, net of cash acquired - (52.2)
Net proceeds on disposal of business 3 17.6 0.4
Repayments of loans issued/(loans issued) 0.2 (1.0)
Interest received 0.4 0.8
Net cash used in investing activities (55.6) (112.8)
Financing activities
Interest paid (8.6) (9.7)
Dividends paid 9 (40.9) (42.9)
Principal elements of lease payments (13.8) (13.5)
Drawdown of bank loans 53.6 75.2
Repayments of bank loans (12.3) (19.0)
Ordinary shares purchased for share buyback 8 (57.6) (57.7)
Net cash used in financing activities (79.6) (67.6)
Net increase/(decrease) in cash and cash equivalents 8.3 (27.8)
Cash and cash equivalents at beginning of year 16.0 44.7
Effect of foreign exchange rate changes 0.1 (0.9)
Cash and cash equivalents at end of year 10 24.4 16.0
Consolidated statement of changes in equity
For the year ended 31 December 2025
Share capital Share premium account Own shares Translation reserves Other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m
1 January 2024 33.1 177.1 (15.6) 52.3 139.9 404.0 790.8 1.5 792.3
Profit for the year - - - - - 20.0 20.0 0.7 20.7
Exchange differences on translation of overseas operations - - - (13.5) - - (13.5) (0.3) (13.8)
Movements on hedges of net investments - - - - 4.1 - 4.1 - 4.1
Movements on cash flow hedges - - - - (0.1) - (0.1) - (0.1)
Actuarial losses on defined benefit pension schemes net of deferred tax - - - - - (0.4) (0.4) - (0.4)
Total comprehensive income for the year - - - (13.5) 4.0 19.6 10.1 0.4 10.5
Ordinary shares acquired (1.5) - - - 1.5 (90.6) (90.6) - (90.6)
Settlement of share awards - - 4.5 - (4.7) 0.2 - - -
Share-based payments - - - - 0.6 - 0.6 - 0.6
Dividends - - - - - (42.8) (42.8) (0.1) (42.9)
31 December 2024 31.6 177.1 (11.1) 38.8 141.3 290.4 668.1 1.8 669.9
Profit for the year - - - - - 54.9 54.9 0.5 55.4
Exchange differences on translation of overseas operations - - - (10.0) - - (10.0) (0.5) (10.5)
Movements on hedges of net investments - - - - (6.9) - (6.9) - (6.9)
Movements on cash flow hedges - - - - 0.1 - 0.1 - 0.1
Actuarial gains on defined benefit pension schemes net of deferred tax - - - - - 1.4 1.4 - 1.4
Total comprehensive income for the year - - - (10.0) (6.8) 56.3 39.5 - 39.5
Ordinary shares acquired (1.6) - - - 1.6 (30.0) (30.0) - (30.0)
Settlement of share awards - - 4.6 - (4.0) (0.6) - - -
Share-based payments - - - - 3.4 - 3.4 - 3.4
Dividends - - - - - (40.8) (40.8) (0.1) (40.9)
31 December 2025 30.0 177.1 (6.5) 28.8 135.5 275.3 640.2 1.7 641.9
The own shares reserve represents the cost of Bodycote plc shares held by the
Bodycote International Employee Benefit Trust to satisfy share-based payment
awards granted under the Group’s incentive schemes. As at 31 December 2025,
944,252 (31 December 2024: 1,627,781) ordinary shares of 173/11p each that had
been acquired in the market were held by the Bodycote International Employee
Benefit Trust. Included within other reserves is a capital redemption reserve
of £132.9m (2024: £131.3m) which consists of £129.8m (2024: £129.8m)
transferred from retained earnings on the conversion of B shares into deferred
shares in 2008 and 2009, and a total of £3.1m arising from the share buyback
programme which commenced in 2024 and was extended in July 2025. Of the
£3.1m, £1.6m was incurred in 2025. See note 8 for details.
Notes to the consolidated financial statements
Year ended 31 December 2025 General information
Bodycote plc is a company incorporated in the United Kingdom under the
Companies Act 2006. The nature of the Group’s operations and its principal
activities, and information on the Group’s objectives, are included within
the Group’s Company overview and Strategic report in the 2025 Annual report.
Items included in the financial statements of each entity in the Group are
measured using the currency of the primary economic environment in which the
entity operates. These condensed consolidated financial statements are
presented in pounds sterling, which is the functional and presentation
currency of the Parent Company. Foreign operations are included in accordance
with the policies set out in the Foreign Currencies accounting policy in the
2025 Annual report.
Basis of preparation and non-statutory financial statements
The financial statements of the Group, from which these condensed consolidated
financial statements are derived, have been prepared in accordance with
UK-adopted international accounting standards as applied in accordance with
the provisions of the Companies Act 2006.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2025 or 2024 but is derived
from those accounts. Statutory accounts for 2024 have been delivered to the
Registrar of Companies and those for 2025 will be delivered following the
Company's Annual General Meeting. The auditor has reported on those accounts;
their reports were unqualified, did not draw attention to any matters by way
of emphasis and did not contain statements under s.498 (2) or (3) of the
Companies Act 2006.
1. Segmental analysis
The Group has 136 operational locations across the world providing a range of
market sectors with thermal processing services. It
organises its plants into three divisions:
Specialist Technologies: This division includes the
Group’s Hot Isostatic Pressing (‘HIP’) business; its Speciality
Stainless Steel Processes (‘S 3 P’) business and its
Surface Technology business.
Precision Heat Treatment: This division includes the
Group’s business centred on the controlled heating and cooling of metals to
obtain the desired mechanical, chemical and metallurgical properties for the
end process. It also includes the Group’s Low Pressure Carburising and
Corr-I-Dur processes.
Non-core: The Group has identified a number of plants that
form part of its Optimisation programme and are considered non-core. These
plants typically provide heat treatment services using older, less efficient
and more carbon-intensive technologies. The Group is managing these sites with
a view to merging them with other plants in the portfolio, closing plants, or
selling them over the coming 24 months. In July 2025 this programme was
expanded to include an additional 13 plants.
The Group’s Chief Executive Officer is considered to be the Chief Operating
Decision Maker (‘CODM’) of the Group and reviews the results of each of
the divisions on a monthly basis focusing on adjusted operating profit which
is defined as operating profit before acquisition costs, amortisation of
acquired intangibles and exceptional items. Accordingly, the three divisions
outlined above are considered to be the Group’s Operating and Reportable
segments as defined in IFRS 8 Operating Segments.
In determining the segments’ adjusted operating profit, the Group makes
certain allocations of costs that are incurred centrally to benefit each of
the segments. To the extent that these costs are of a nature that will
continue to be incurred after the Group’s Optimisation programme has been
completed, they are not allocated to the non-core segment.
As described above, during 2025 the Group expanded its Optimisation programme
(“Optimise”) to include a further 13 plants. At the same time, actions at
one site that had been part of the Optimisation programme resulted in its
removal from the programme. Consequently the prior year segmental analysis has
been restated to reflect the updated Optimisation programme and the way that
the Group is now viewed by the CODM.
2025
Specialist Technologies Precision Heat Treatment Central costs and eliminations Total core Non-core Total Group
£m £m £m £m £m £m
Revenue 212.3 459.3 - 671.6 55.5 727.1
Result
Adjusted operating profit/(loss) 57.6 73.7 (18.3) 113.0 1.3 114.3
Amortisation of acquired intangible assets (8.6) (1.1) - (9.7) - (9.7)
Acquisition costs - - (0.1) (0.1) - (0.1)
Operating profit/(loss) before exceptional items 49.0 72.6 (18.4) 103.2 1.3 104.5
Exceptional items (0.9) (3.7) (0.3) (4.9) (16.0) (20.9)
Operating profit/(loss) 48.1 68.9 (18.7) 98.3 (14.7) 83.6
Finance income 0.4
Finance charges (9.5)
Profit before taxation 74.5
Taxation (19.1)
Profit for the Year 55.4
2024 restated
Specialist Technologies Precision Heat Treatment Central costs and eliminations Total core Non-core Total Group
£m £m £m £m £m £m
Revenue 222.3 459.8 - 682.1 75.0 757.1
Result
Adjusted operating profit/(loss) 65.5 80.4 (20.4) 125.5 3.5 129.0
Amortisation of acquired intangible assets (8.7) (1.7) - (10.4) - (10.4)
Acquisition costs (2.4) - - (2.4) - (2.4)
Operating profit/(loss) prior to exceptional items 54.4 78.7 (20.4) 112.7 3.5 116.2
Exceptional items (1.4) (24.4) (30.7) (56.5) (21.8) (78.3)
Operating profit/(loss) 53.0 54.3 (51.1) 56.2 (18.3) 37.9
Finance income 0.8
Finance charges (10.3)
Profit before taxation 28.4
Taxation (7.7)
Profit for the Year 20.7
The segmental analysis has been restated to reflect the expansion of the
Optimise programme in July 2025. Adjusted operating profit of the Specialist
Technologies segment has been increased by £0.5m, to £65.5m, and Precision
Heat Treatment decreased by £2.6m, to £80.4m. The net effect is to decrease
core adjusted operating profit and increase non-core adjusted operating profit
by £2.1m with no effect on the Group’s adjusted operating profit.
Inter-segment revenues are not material in either year.
The Group does not have any one customer that contributes more than 10% of
revenue in either year.
2025
Specialist Technologies Precision Heat Treatment Total core Non-core Total Group
Revenue £m £m £m £m £m
Western Europe 105.1 215.4 320.5 40.2 360.7
North America 100.0 162.0 262.0 14.2 276.2
Emerging Markets 7.2 81.9 89.1 1.1 90.2
Group 212.3 459.3 671.6 55.5 727.1
2024 restated
Specialist Technologies Precision Heat Treatment Total core Non-core Total Group
Revenue £m £m £m £m £m
Western Europe 119.1 211.2 330.3 50.9 381.2
North America 95.7 165.7 261.4 23.0 284.4
Emerging Markets 7.5 82.9 90.4 1.1 91.5
Group 222.3 459.8 682.1 75.0 757.1
Other information
2025
Specialist Technologies Precision Heat Treatment Central costs and eliminations Total core Non-core Total Group
£m £m £m £m £m £m
Gross capital additions 23.2 59.3 4.4 86.9 4.4 91.3
Depreciation and amortisation 23.3 48.6 3.0 74.9 5.6 80.5
Impairments - (0.3) 0.3 - 3.7 3.7
2024 restated
Specialist Technologies Precision Heat Treatment Central costs and eliminations Total core Non-core Total Group
£m £m £m £m £m £m
Gross capital additions 18.7 57.9 5.2 81.8 8.2 90.0
Depreciation and amortisation 23.5 48.7 3.8 76.0 9.7 85.7
Impairments 0.8 23.1 28.4 52.3 13.0 65.3
Geographical information
The Group’s revenue from external customers analysed by country in which the
service is delivered is detailed below:
2025 2024
Revenue £m £m
USA 260.8 271.2
France 95.9 104.2
Germany 69.9 72.3
UK 65.2 68.5
Sweden 45.1 50.3
Netherlands 31.3 29.5
Mexico 25.0 24.7
China 20.5 20.4
Canada 15.4 13.2
Poland 13.3 12.8
Czech Republic 13.2 12.9
Italy 12.5 15.7
Finland 11.1 10.2
Turkey 10.6 11.1
Other countries less than £10m revenue 37.3 40.1
Group 727.1 757.1
2. Operating
profit
2025 2024
£m £m
Revenue 727.1 757.1
Cost of sales (446.3) (460.4)
Gross profit 280.8 296.7
Selling costs (22.0) (22.3)
Administration expenses (158.7) (165.1)
Other operating income 6.5 9.7
Other operating expenses (0.7) (0.4)
Net impairment losses on financial assets (1.4) (2.4)
Operating profit before exceptional items 104.5 116.2
Exceptional items (note 3) (20.9) (78.3)
Operating profit 83.6 37.9
Operating profit for the year has been arrived at after charging/(crediting):
2025 2024
£m £m
Within operating profit before exceptional items:
Employee costs 268.0 280.6
Temporary agency contractors 15.6 16.7
Pension scheme administration expenses 0.4 0.6
Utility costs 70.3 68.8
Consumables and gases 53.6 52.6
Transport and carriage costs 11.5 12.4
Inventories expensed 69.8 70.5
Repairs and maintenance 24.5 25.5
Depreciation of property, plant and equipment 56.5 59.7
Depreciation of right-of-use assets 13.1 13.6
Amortisation of other intangible assets 10.9 12.4
Impairment loss on trade receivables 1.4 2.4
Impairment of property, plant and equipment - 0.1
Gain on disposal of property, plant and equipment (0.4) (5.5)
Gain on disposal of right-of-use assets - (0.2)
Government assistance support received 1 (1.4) (1.0)
Acquisition costs 0.1 2.4
Net foreign exchange loss/(gain) 0.5 (0.4)
Within exceptional items:
Site closure and associated costs (see note 3) 11.8 5.2
Impairment of property, plant and equipment (see note 3) 3.1 16.9
Impairment of other intangible assets (see note 3) 0.3 29.2
Impairment of right-of-use assets (see note 3) 0.3 1.1
Impairment of goodwill (see notes 3 & 6) - 18.0
(Gain)/loss on disposal of property, plant and equipment (see note 3) (1.8) 0.1
1 Government assistance consists of support towards R&D
of £1.1m (2024: £0.4m); local economic support of £0.3m (2024: £0.4m);
energy support programmes £nil (2024: £0.1m); and £nil (2024: £0.1m) in
respect of other support programmes.
3. Exceptional
items
2025 2024
£m £m
Impairment of ERP intangible asset: - 28.4
Impairment of goodwill - 18.0
Optimisation programme: 20.9 31.9
Impairment of assets 3.7 18.8
Severance and redundancy cost 5.6 4.1
Site closure and associated costs 11.8 5.2
(Gains)/losses on sale of property, plant and equipment (1.8) 0.1
Loss on sale of business 0.9 2.7
Other programme costs 0.7 1.0
Total exceptional items 20.9 78.3
Optimise programme
In 2024 the Group announced the Optimise programme to drive improvements
across the business, primarily centred on restructuring and/or closing sites
that were utilising older, less efficient and more carbon-intensive
technologies. This program was extended in July 2025 to include a further 13
sites.
During 2025, the Group has continued to progress the site closures and asset
sales forming part of Optimise, recognising an exceptional charge of £20.9m
(2024: £31.9m), net of gains on the sale of the associated assets.
Impairments of £3.7m (2024: £18.8m) have been charged to exceptional items
relating to sites, operational lines, equipment and intangible assets that
will no longer generate benefits. These impairments comprise of £3.1m (2024:
£16.9m) for property, plant and equipment, £0.3m (2024: £1.1m) for
right-of-use assets and £0.3m impairment of software and acquired intangibles
(2024: £0.8m). Gains of £1.8m (2024: losses of £0.1m) were realised on the
sale of property, plant and equipment assets that were no longer required as a
result of Optimise.
Site closure costs of £11.8m (2024: £5.2m) were incurred in respect of
closures announced before 31 December 2025 including amounts charged to
provisions of £6.8m (2024: £5.2m) net of provision releases of £0.6m (2024:
£nil). Related severance and redundancy costs of £5.6m (2024: £4.1m) were
incurred in relation to staff at sites and in central roles who were informed
that they were affected by the Optimisation programme before 31 December 2025.
This comprised of £6.8m (2024: £3.3m) charged to provisions net of provision
releases £1.3m (2024: £nil) and £nil (2024: £0.8m) charged directly to the
profit and loss account.
In November 2025 the Group sold 10 non-core sites in France. These sites were
focused on serving automotive and industrial markets and were not well aligned
with Bodycote’s strategic focus areas. Cash consideration of £19.3m was
received for the assets sold with a loss on disposal of £0.9m recognised
within exceptional costs. Up to the date of disposal, the plants divested
achieved 2025 full year revenues of £22.4m, and operating profit before
exceptional items of £0.4m. The loss on sale of business in 2024 of £2.7m,
relates to the sale of the Metz Tessy business in France, consisting of a
single site. See the 2024 Annual Report for further details.
See also the strategic review of the 2025 Annual Report for further details of
the Optimisation programme.
4. Taxation
charge
2025 2024
£m £m
Current taxation - charge for the year 17.5 20.7
Current taxation - adjustments in respect of previous years - 1.5
Deferred tax - charge for the year 0.4 (13.2)
Deferred tax - adjustments in respect of previous years 1.2 (1.3)
Total taxation charge 19.1 7.7
The Group operates in several jurisdictions, some of which have tax rates in
excess of the UK rate, and as such it uses a weighted average country tax
rate, rather than the UK tax rate, for the reconciliation of the charge for
the year to the profit before taxation per the consolidated income statement
as this provides the most meaningful information to the users of the financial
statements. The weighted average corporation tax rate was
25.1% in 2025 (2024: 25.1%). The OECD Pillar II GloBE Rules do not have a
material impact on the Group’s current tax charge and the Group has applied
the exception in IAS 12 and has not recognised, or disclosed, information
about deferred tax assets and liabilities related to these rules.
The charge for the year can be reconciled to the profit before taxation per
the consolidated income statement as follows:
2025 2024
£m £m
Profit before taxation 74.5 28.4
Tax at the weighted average country tax rate of 25.1 % (2024: 25.1%) 18.7 7.2
Tax effect of expenses in various jurisdictions not deductible in determining taxable profit 2.0 1.6
Impact of recognition or derecognition of deferred tax balances (0.6) 0.8
Tax effect of other adjustments in respect of previous years:
Current tax 1 - 1.5
Deferred tax 1 1.2 (1.3)
Effect of financing activities between jurisdictions 2 (1.9) (2.5)
Impact of trade and minimum corporate taxes 0.2 0.2
Effect of changes in statutory tax rates on deferred tax assets and liabilities (0.8) (0.2)
Other tax risk provision movements 3 0.3 0.4
Tax expense for the year 19.1 7.7
1 2025 and 2024 adjustments in current and deferred tax
in respect of previous years relate mainly to changes in assumptions and
outcomes in UK and overseas tax positions.
2 The Group is externally financed by a mix of cash flows
from operations and short-term borrowings. Internally, operating subsidiaries
are predominantly financed by intercompany loans. The effect of these
arrangements is stated net of provisions, including a credit relating to a
provision release of £1.9m (2024: £2.5m) based on management’s estimation
of the tax risk relating to the potential disallowance of interest.
3 Includes provisions for local tax risks and
cross-border transactions. 2025 includes a credit of £0.3m (2024: £2.2m) for
the release of provisions for tax risks which are no longer within an audit
period.
Tax on retirement benefit obligations taken directly to equity was £nil
(2024:charge of £0.1m).
The Group recognises a number of tax provisions in respect of ongoing tax
enquiries and in recognition of the multinational tax environment in which
Bodycote operates where the nature of the tax positions that are taken is
often complex and subject to change. Included within current tax liabilities
of £34.3m (2024: £32.2m) are tax provisions totalling £23.8m (2024:
£24.9m), of which £2.0m become ineligible for tax audit during 2026 (2024:
£4.2m become ineligible in 2025). The provisions are based on an assessment
of a range of possible outcomes to determine reasonable estimates of the
consequences of tax authority audits in the various tax jurisdictions in which
the Group operates. The material provisions relate to the financing of the
Group’s operations where management’s judgement is exercised to determine
the quantum of the tax risk provisions based on an understanding of the
appropriate local tax legislation, taking into consideration the differences
of interpretation that can arise on a wide variety of issues including the
nature of ongoing tax audits and the experience from earlier enquiries, and
determining whether any possible liability is probable. The Group’s
individual provisions by country vary in quantum from £1.9m to £8.8m (2024:
£1.9m to £8.8m).
5. Earnings per
share
2025 2024
£m £m
Earnings
Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent 54.9 20.0
Number Number
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share 176,816,708 186,012,493
Effect of dilutive potential ordinary shares:
Shares subject to performance conditions 53,826 418,728
Shares subject to vesting conditions 355,857 448,614
Weighted average number of ordinary shares for the purpose of diluted earnings per share 177,226,391 186,879,835
Pence Pence
Earnings per share:
Basic 31.0 10.8
Diluted 31.0 10.7
2025 2024
£m £m
Adjusted earnings
Net profit attributable to equity holders of the parent 54.9 20.0
Add back:
Amortisation of acquired intangible assets 9.7 10.4
Acquisition costs 0.1 2.4
Exceptional items 20.9 78.3
Tax on adjusted earnings (7.1) (20.7)
Adjusted earnings 78.5 90.4
Pence Pence
Adjusted earnings per share:
Basic 44.4 48.6
Diluted 44.3 48.4
As at 31 December 2025, the performance conditions have only been met for some
of the Group’s open share plans. Those plans result in nil dilution of
earnings per share and 0.1p dilution in adjusted earnings per share (2024:
0.1p and 0.2p dilution respectively).
6. Goodwill
2025 2024
£m £m
Cost
At 1 January 285.9 282.3
Exchange differences (5.9) (0.2)
Transfer to assets held for sale (2.0) -
Recognised on acquisition of businesses - 3.8
Total cost 278.0 285.9
Accumulated impairment
At 1 January 78.9 60.8
Impairment - 18.0
Exchange differences (1.4) 0.1
Total accumulated impairment 77.5 78.9
Carrying amount 200.5 207.0
Goodwill acquired through a business combination is allocated to the groups of
CGUs that are expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually or more frequently if
there are indications that its carrying value may not be recoverable. To test
the goodwill for impairment, the carrying value of the groups of CGUs
containing goodwill are compared to their recoverable amounts, calculated as
the higher of their fair value less costs to dispose and value in use.
The Group has determined its CGUs based on geography, customer groupings, and
processes to reflect the lowest level at which the Group’s operations
generate cash inflows that are largely separate to each other. In previous
years they have also formed the lowest level to which the Group has allocated
goodwill and the level at which goodwill has been monitored internally. A
number of changes in the Group’s management and operational structures took
place in early 2025, as a result of the strategic review undertaken in 2024,
and the Group’s internal reporting was updated as a result of those changes.
Accordingly, in the year ended 31 December 2025 the Group has reassessed the
level at which goodwill is monitored internally and, following this
reassessment, it has concluded that the lowest level at which management
reviews goodwill is now the following six groups of CGUs:
• HIP
• S 3 P
• Surface Technology (‘ST’)
• Global Automotive and General Industrial (‘AGI’), excluding Emerging
markets
• Global Aerospace, Defence and Energy (‘ADE’)
• Emerging markets
A summary showing how the CGUs at 31 December 2024 were combined into the
above groups of CGUs is set out below:
Goodwill
2024
Group of CGUs CGUs £m
HIP North America HIP 3.9
Europe HIP 2.2
Total HIP 6.1
ST Europe ST 12.6
North America ST 28.5
Total ST 41.1
S 3 P Total S 3 P nil
Total Specialist Technologies 47.2
AGI Europe AGI 1 24.9
North America AGI 3
9
.
4
Total AGI 64.3
ADE UK ADE 11.0
North America ADE 6
9
.
7
France and Belgium ADE 1
.
2
Total ADE 81.9
Emerging markets Eastern Europe AGI 11.6
Asia AGI nil
Total Emerging markets 1
1
.
6
Total Precision Heat treatment 157.8
Non-core 1 2.0
Total Goodwill 207.0
1 £2m of goodwill that was reported within the Europe AGI CGU at 31 December
2024 was re-allocated to Non-core following the expansion of the Group's
Optimise Programme in 2025.
The Group has therefore aggregated the goodwill previously held by CGUs to
determine the goodwill held by those six groups of CGUs, and they formed the
basis of its impairment test at 31 December 2025. Prior to aggregating the
goodwill, the Group undertook an impairment indicator assessment based on the
CGUs that formed the basis of the impairment test at 31 December 2024. No
indicators of impairment in respect of those CGUs were identified
In assessing value in use, estimated pre-tax future cash flows for each group
of CGUs are discounted to their present value using a pre-tax discount rate
which reflects current market assessments of the time value of money and the
risks specific to the group of CGUs, including country risk premia.
Fair value less costs to dispose is determined in a similar manner but takes
into account the benefits of actions that a rational buyer would take during
the forecast period. Those actions include any that form part of the Group’s
strategic optimisation programme that the business had not announced to the
affected plants as at 31 December 2025 as well as other capital expenditure
and growth initiatives planned. Such actions are not permitted to be reflected
in the value in use calculations as at 31 December 2025. Because the majority
of the inputs into the fair value calculations are not observable, they are
categorised as level 3 in the fair value hierarchy.
In 2025, the recoverable amounts of all of the groups of CGUs were determined
using value in use with the exception of AGI and ST, for which the recoverable
amount has been determined using fair value less costs to dispose. The fair
value less costs to dispose of AGI and ST are in excess of their value in use
since a number of the benefits referred to above had not been formally
committed to prior the year end (for example, via a public announcement) and
therefore could not be reflected in their value in use.
The cash flows of each group of CGUs are based on the 2026 budget and the
five-year financial plan up to and including 2030, both of which have been
approved by the Board. A long-term growth rate has been applied into
perpetuity from 2030 onwards.
The key assumptions applied in determining the recoverable amount of each
group of CGUs were as follows:
Revenue: Revenue for 2026–2030 was projected based on
management’s growth expectations, which take account of the expected trends
in the underlying market sectors served by each group of CGUs. These were
benchmarked against external projections for each market. Pricing expectations
were based on recent experience in the market and forecast inflation
expectations.
Operational margin growth: Operational margin growth
represents the changes expected to the group of CGUs’ operating profit as a
percentage of revenue. The margin
levels assumed reflect management’s expectations of future business
performance and are informed by past performance adjusted for changes made to
the plant footprint.
Capital expenditure: The future cash flows include
estimates of capital expenditure required to maintain the existing asset base
of each group of CGUs and are based on historical experience. In determining
the estimates of capital expenditure, management has assumed that capital
expenditure will at least equal depreciation in the long term. In the case of
AGI and ST, which were measured on a fair value less costs to dispose basis,
planned expansionary capex projects were also included.
Long-term growth rate: Long-term growth rates have been
applied into perpetuity based on the long-term average GDP growth projections
of the geographies relevant to each group of CGUs. Growth rates are in the
range of 1.5% to 2.4% (2024: 2.0% to 2.2%).
Discount rate: The discount rates have been derived from a
weighted average cost of capital, adjusted for the geographies in which each
group of CGUs operates. The post-tax discount rates range from 9.0% to 9.3%
(2024: 9.4% to 10.1%). The pre-tax discount rates are the rates which, when
applied to the pre-tax cash flows, result in the same NPV as calculated by the
post-tax discount rate applied to the post-tax cash flows. The pre-tax
discount rates range from 11.7% to 11.9% (2024: 11.6% to 12.7%).
Goodwill is allocated to the Group’s reportable segments as set out below:
2025 2024 1
£m £m
Specialist Technologies 45.3 47.2
Precision Heat Treatment 155.2 157.8
Non-core - 2.0
200.5 207.0
1 Restated to reflect the changes to the Group’s
operating segments following the expansion to the Optimise Programme announced
in July 2025. As a result, 2024 goodwill in the non-core segment has increased
by £2m and Precision Heat Treatment has decreased by £2m. See note 1 for
further details.
With the exception of goodwill related to the French sites disposed in 2025,
no goodwill was allocated to the Group’s non-core segment on the basis that
the value of that segment was minimal compared to the Group’s core segments.
Goodwill of £2.0m, related to the 10 French sites disposed in 2025, was
allocated to the non-core segment based on the relative fair value of the
business sold and the group of CGUs to which it previously belonged.
A summary of the goodwill allocated to each of the groups of CGUs containing
goodwill, along with the long-term growth rates and discount rates used to
determine their recoverable amount, is set out below:
Goodwill carrying value Long-term growth rate Post-tax discount rate Pre-tax discount rate
2025 2025 2025 2025
£m % % %
Specialist technologies:
HIP 5.9 1.6 9.2 11.7
ST 39.4 1.6 9.3 11.9
S 3 P nil n/a n/a n/a
Precision Heat Treatment:
AGI 63.6 1.5 8.8 11.6
ADE 79.2 1.6 9.2 11.7
Emerging markets 12.4 2.4 9.3 11.7
The recoverable amount was higher than the book value for all groups of CGUs
and, accordingly, the Directors have concluded that no impairment charge is
required as at 31 December 2025 (2024: £18.0m impairment recorded in respect
of the NA AGI CGU, which is now part of the AGI CGU).
Expected future cash flows are inherently uncertain and could change
materially over time. They are affected by several factors, including market
and production estimates, together with economic factors such as prices,
discount rates, currency exchange rates, operational costs, and future capital
expenditure.
The Group has conducted sensitivity analysis by considering reasonably
possible changes to the key assumptions applied in the recoverable amount
calculations for each group of CGUs. The sensitivity analysis considered
downside scenarios including an increase in discount rates, a reduction in
sales growth throughout the forecast period and reduced operating margin
growth. With the exception of AGI and ST, no reasonably possible downside
reductions to any of the assumptions resulted in an impairment for any of the
groups of CGUs.
The sensitivities modelled are intended to reflect an unlikely but reasonably
possible downturn in key assumptions that persists in the long-term. None of
the downside scenarios incorporate mitigating actions reflect mitigating
actions that management would take in the event that such a situation
developed.
In determining the sensitivities to apply, consideration was given to the
impact that climate change risks and opportunities may have on the Group’s
businesses. Specific scenarios relating to the potential risks of climate
change, as set out in the TCFD section of the Annual Report, were considered
to determine if these should be included in the modelling performed and it was
determined that none of these scenarios would have a material impact on the
outcome. Furthermore, the impact of the sensitivities was deemed sufficiently
severe to cover a range of potential risks, some of which could relate to
these potential climate change risks.
The recoverable amount of AGI and ST were determined using a fair value less
costs to dispose. For AGI, this reflected operating margins which, in 2030,
were modestly (30bps) below the level achieved in 2023 prior to the recent
downturn in industrial and automotive markets, alongside benefits from
Optimise and other initiatives giving rise to an annual cash benefit of £5.6m
by 2030. If none of these benefits were achieved, the group of CGUs would
retain a more modest level of headroom. In addition, in the unlikely event
that no benefits were achieved and margins were limited to 150bps below the
2023 level, the headroom of £82m would be fully eroded. A further 50bps
reduction in margin would result in an impairment of c.£12.0m.
For ST, this reflected operating margins which improve by 330bps versus the
2024 level, prior to the recent downturn in Oil & Gas markets, alongside
benefits from Optimise and other initiatives giving rise to an annual cash
benefit of £4.9m. If none of these benefits were achieved and margins were
limited to 90bps below the 2024 level, headroom of £56.5m would be fully
eroded. A further 50bps reduction in the margin would result in a c.£4.5m
impairment.
7. Provisions
2025
Restructuring Environmental Legal Total
£m £m £m £m
At 1 January 2025 8.4 3.9 2.1 14.4
Additions 13.6 0.9 1.8 16.3
Released (1.9) (0.3) (0.4) (2.6)
Utilisation (10.9) (1.1) (0.6) (12.6)
Exchange difference (0.1) (0.2) 0.1 (0.2)
At 31 December 2025 9.1 3.2 3.0 15.3
Included in current liabilities 13.1
Included in non-current liabilities 2.2
15.3
In December 2024, the Group announced that it had commenced the Optimise
programme. This programme includes undertaking a number of actions to continue
to drive step changes and improvements across the Group, primarily centred on
sites utilising older, more commoditised technologies with higher carbon
footprints. As described below, a number of provisions have been made as a
result of that programme. Refer to the strategic report in the 2025 Annual
report for further information of this programme.
Restructuring
Included in restructuring provision additions in the year are £13.6m (2024:
£8.5m) which have been charged to exceptional items in the consolidated
income statement in respect of the Optimisation programme. These charges
related to the redundancy and severance of employees who have been notified
before the year end, along with site closure costs where the announcement has
been made. The majority of cash outflows in respect of these provisions are
expected to occur within 12 months of the balance sheet date. See note 3 for
further details.
Environmental Provisions
The Group provides for the costs of environmental remediation if there is a
probable outflow of economic resources that has been identified at the time of
plant closure, as part of acquisition due diligence or in other circumstances
where remediation by the Group is required. This provision is reviewed
annually to determine the best estimate of expenditure required to settle the
identified obligations. Where applicable, external confirmations of the future
liabilities are obtained.
The Group could be subjected to regulatory or legislative requirements to
remediate sites in the future. However, it is not possible at this time to
determine whether, and to what extent, any liabilities exist, other than for
those recognised above. Therefore no provision is recognised in relation to
these items.
Legal provisions
Legal provisions include, but are not limited to, alleged breach of contract
and alleged breach of environmental legislation. While the Group cannot
predict the outcome of individual legal actions, a provision is recognised if
the exposure can be reliably measured and an outflow of economic benefits is
considered probable. The amount provided is based on legal advice .
There were no individually material provisions as at 31 December 2025.
8. Share
capital
Ordinary Shares Share Capital 1
2025 2024 2025 2024
Number Number £m £m
At 1 January 182,897,496 191,456,172 31.6 33.1
Share buyback programme (9,401,421) (8,558,676) (1.6) (1.5)
At 31 December 173,496,075 182,897,496 30.0 31.6
1 Nominal value of shares held is 173/11 p each.
In 2024 a share buyback programme was announced that was then extended in July
2025. The first tranche of the programme was for £60m and completed in 2025.
A total of 8,979,759 shares were repurchased, including 421,083 purchased in
2025, for a total price including transactional costs of £60.4m, of which
£2.7m was paid in cash in 2025. The first extension of the programme of
£30m, announced in December 2024, completed in July 2025 with a total of
5,166,009 shares repurchased for a total price including transactional costs
of £30.2m. In July 2025 the Group announced a further extension of £30m to
the share buyback programme. A total of 3,814,329 shares have been repurchased
in relation to this extension for a total price including transactional costs
of £24.7m. As at 31 December 2025 a liability of £5.3m remained for shares
contracted to be repurchased but for which the repurchases were still
outstanding (2024: £32.9m).
The nominal value of the shares purchased in 2025 is £1.6m (2024: £1.5m)
which has been transferred to the capital redemption reserve with the
difference between the nominal value and the purchase price recorded within
retained earnings.
2025 2024
Shares purchased with a nominal value of 17 3/11 p 9,401,421 8,558,676
Consideration excluding costs £57.3m £57.3m
Costs £0.3m £0.4m
Total consideration £57.6m £57.7m
9. Dividends
2025 2024 2025 2024
Per share Per share £m £m
Interim dividend for the year ended 31 December 6.9 6.9 12.0 12.7
Proposed final/final dividend for the year ended 31 December 16.1 16.1 27.8 28.7
Total dividend 23.0 23.0 39.8 41.4
The 2024 final dividend of 16.1p per share was paid on 5 June 2025. The 2025
interim dividend of 6.9p per share was paid on 6 November 2025. The proposed
final dividend for 2025 of 16.1p, to be paid on 11 June 2026 to shareholders
on the register at close of business on 1 May 2026, is subject to approval at
the AGM on 27 May 2026 and therefore is not included as a liability in these
consolidated financial statements.
10. Notes to
the cash flow statement
2025 2024
£m £m
Profit for the year 55.4 20.7
Adjustments for:
Finance income (0.4) (0.8)
Finance charges 9.5 10.3
Taxation charge 19.1 7.7
Operating profit 83.6 37.9
Non-cash items reflected in operating profit before exceptional items:
Depreciation of property, plant and equipment 56.5 59.7
Depreciation of right-of-use assets 13.1 13.6
Amortisation of other intangible assets 10.9 12.4
Profit on disposal of property, plant and equipment (0.4) (5.5)
Profit on disposal of right-of-use assets - (0.2)
Impairment of property, plant and equipment and other assets - 0.1
Non-cash items reflected in exceptional items:
(Profit)/loss on disposal of property, plant and equipment (1.8) 0.1
Disposal of business 0.9 2.6
Impairment of goodwill - 18.0
Impairment of acquired intangibles - 0.8
Impairment of fixed assets 3.7 46.4
EBITDA 166.5 185.9
Share-based payments 3.4 0.6
(Increase)/decrease in inventories (1.7) 1.3
(Increase)/decrease in receivables (3.9) 7.2
Increase/(decrease) in payables 0.3 (7.6)
Increase/(decrease) in provisions 0.9 (0.6)
Cash generated by operations 165.5 186.8
Net income taxes paid (18.6) (32.1)
Net exchange differences (3.4) (2.1)
Net cash from operating activities 143.5 152.6
2025 2024
£m £m
Cash and cash equivalents comprise:
Cash and bank balances 25.2 19.1
Bank overdrafts (included in borrowings) (0.8) (3.1)
24.4 16.0
Cash and bank balances include £0.7m (2024: £1.1m) held in the USA relating
to the refund of a pension surplus which the Group intends to use to fund
future pension contributions for its USA employees to avoid the full amount
becoming subject to regulatory restrictions in the USA.
11. Post
balance sheet events
Acquisition of Spectrum Thermal Processing LLC
On 14 January 2026 the Group acquired 100% of the ordinary share capital of
Spectrum Thermal Processing LLC (‘Spectrum’) in North America for a total
gross consideration of £5.9m ($8.0m) on a cash and debt free basis which was
settled through the Group’s existing cash and borrowing facilities. Spectrum
is a Precision Heat Treatment business supplying the Aerospace and Defence
markets and brings well established Nadcap-accredited capabilities in the
Northeast US, spanning a range of high-quality Precision Heat Treatment
processes complementing the Aerospace and Defence strategy in North America.
The Group’s assessment of the fair value of the assets and liabilities
acquired is ongoing but the net assets acquired are expected to relate
primarily to PPE and customer intangibles with the remainder allocated to
goodwill.
Share repurchase programme
On 10 March 2026 the Group announced its intention to launch a share
repurchase programme of up to £80.0m expected to be completed by the end of
2027, commencing on 11 March 2026. No amounts are included in these financial
statements in respect of
that buyback.
Alternative performance measures (APMs) (unaudited)
The Group’s Financial Statements are prepared using the basis of preparation
and accounting policies described in the 2025 Annual Report. To provide
additional information and analysis and to enable a full understanding of the
Group’s results, management also makes use of a number of APMs in its
internal management of the business and as part of its internal and external
reporting. These APMs are prepared and presented as described below:
Adjusted results (including adjusted operating profit;
adjusted profit before tax; adjusted EBITDA; and adjusted tax charge) are
defined as being the respective GAAP measure excluding the effect of
exceptional items, acquisition costs and amortisation of acquired intangibles.
These measures form the basis of the Group’s internal reporting and are
presented to give greater insight into the ongoing trading performance of the
Group excluding the effects of acquisitions and one-off items.
Constant currency results (including constant currency
revenue and constant currency adjusted operating profit) present the 2025
results translated into GBP using the same exchange rates as were used in
2024. Constant currency results are intended to provide
further insight into the trading performance of the business excluding the
effects of foreign exchange movements that are beyond its control.
Organic results (including organic revenue and organic
adjusted operating profit) present the results of the business stated at
constant currency excluding the results of any businesses acquired or disposed
of in either the current or prior year. Organic results are provided to give
greater insight into the trading performance of the Group excluding the
effects of changes to
its composition. The Group sold 10 sites in France in 2025 (see note
3 for more information) and these have been excluded from the organic results
in 2025 and 2024. Metz Tessy, which was sold in December 2024, has been
excluded from the organic results for 2024.
EBITDA (Earnings before interest, taxation, depreciation and amortisation)
is used by management to provide further information about the
ability of its businesses to generate cash before working capital and other
movements. EBITDA is stated before profits and losses on disposal of assets
and impairment charges. A similar measure is used for the Group’s covenant
calculation. A reconciliation of EBITDA to operating profit and cash generated
by activities is included in note 10 to the financial statements.
Core measures reflect the results of the Group’s two
segments based on its technology based platforms. Those segments include the
parts of the business that are expected to continue to exist once the
Group’s Optimisation programme is complete and so give an indication of
performance of the ongoing part of the Group.
Net Debt is defined as the Group’s borrowings (including
finance lease liabilities) net of the Group’s cash and overdrafts balance.
It is used to provide an overall picture of the net indebtedness of the Group.
Free cash flow is defined as the movement in the Group’s
net debt excluding payments made to the Group’s shareholders in respect of
dividends and share purchases, cash flows arising on the acquisitions or
disposal of businesses, movements in net debt due to lease liability additions
and disposals and non-cash share based payment charges which are deducted as a
proxy for the cost of providing the associated benefits to employees. It is
presented to give an indication of the businesses’ ability to generate cash
to support acquisitive growth and return to shareholders.
Adjusted operating cashflow is defined as free cash flow
adjusted to exclude the effects of payments in respect of exceptional items
(typically restructuring payments), finance costs and net tax. Adjusted
operating cashflow forms part of the basis of the Group’s internal reporting
and is presented to give greater insight into the ongoing cash generation of
the Group before financing costs and excluding the effects of acquisitions and
one-off items. The definition of adjusted operating cashflow is consistent
with the definition of the equivalent adjusted profit measures.
Return on capital employed is defined as adjusted
operating profit divided by capital employed, which is defined as the average
of opening and closing net assets adjusted for net (debt)/cash. Return on
capital employed provides a measure of how well the business has deployed
capital to generate profit.
A reconciliation of each of the APMs to its nearest GAAP measure is set out
below. Whilst broadly consistent with the treatment adopted by both the
Group’s business sector peers and by other businesses outside of the
Group’s business sector, these APMs are not necessarily directly comparable
with those used by other companies.
2024 Segmental APMs have been restated to reflect the changes to the Group’s
segments as a result of the expansion of the Optimisation programme announced
in July 2025 (see note 1 for details).
Adjusted operating profit
Adjusted operating profit is reconciled to Operating Profit in note 1 to the
financial statements.
Adjusted operating margin
2025
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Revenue 212.3 459.3 - 671.6 55.5 727.1
Adjusted Operating Profit 57.6 73.7 (18.3) 113.0 1.3 114.3
Adjusted operating margin (%) 27.1% 16.0% n/a 16.8% 2.3% 15.7%
2024 Restated
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Revenue 222.3 459.8 - 682.1 75.0 757.1
Adjusted Operating Profit 65.5 80.4 (20.4) 125.5 3.5 129.0
Adjusted operating margin (%) 29.5% 17.5% n/a 18.4% 4.7% 17.0%
Adjusted profit before taxation
2025 2024
£m £m
Profit before taxation 74.5 28.4
Add back:
Amortisation of acquired intangibles 9.7 10.4
Acquisition costs 0.1 2.4
Exceptional items 20.9 78.3
Adjusted profit before taxation 105.2 119.5
Organic revenue and adjusted operating profit at constant currency.
Reconciled to revenue and adjusted operating profit in the table below:
2025
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Revenue 212.3 459.3 - 671.6 55.5 727.1
Constant exchange rates adjustment 1.8 6.5 - 8.3 0.2 8.5
Revenue at constant currency 214.1 465.8 - 679.9 55.7 735.6
Less adjustments for revenue from disposals completed in the current or prior year - - - - (22.3) (22.3)
Organic revenue 214.1 465.8 - 679.9 33.4 713.3
Adjusted operating profit 57.6 73.7 (18.3) 113.0 1.3 114.3
Constant exchange rates adjustment 0.5 1.3 - 1.8 - 1.8
Adjusted operating profit at constant currency 58.1 75.0 (18.3) 114.8 1.3 116.1
Less adjustments for operating profit from disposals completed in the current or prior year - - - - (2.1) (2.1)
Organic adjusted operating profit 58.1 75.0 (18.3) 114.8 (0.8) 114.0
2024 Restated
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Revenue at constant currency 222.3 459.8 - 682.1 75.0 757.1
Less adjustments from disposals completed in the prior year - - - - (28.6) (28.6)
Organic revenue 222.3 459.8 - 682.1 46.4 728.5
Adjusted operating profit at constant currency 65.5 80.4 (20.4) 125.5 3.5 129.0
Less adjustments from disposals completed in the prior year - - - - (3.4) (3.4)
Organic adjusted operating profit 65.5 80.4 (20.4) 125.5 0.1 125.6
Adjusted EBITDA (earnings before interest, taxation, depreciation and
amortisation)
2025 2024
£m £m
EBITDA 166.5 185.9
Acquisition costs 0.1 2.4
Exceptional items, excluding (gains)/losses on sale of property, plant and equipment, impairments, and losses on disposal of business 18.1 10.4
Adjusted EBITDA 184.7 198.7
Adjusted EBITDA Margin 25.4% 26.2%
Adjusted operating cash flow
2025 2024
£m £m
Adjusted EBITDA 184.7 198.7
Less:
Net capital expenditure (77.0) (60.5)
Principal elements of lease payments (13.8) (13.5)
Provisions movement 0.4 (7.3)
Working capital movement (5.7) (1.9)
Adjusted operating cash flow 88.6 115.5
Free cash flow
2025 2024
£m £m
Adjusted operating cash flow 88.6 115.5
Less:
Restructuring cash flows (14.3) (3.9)
Net income taxes paid (18.6) (32.1)
Net interest paid (8.2) (8.9)
Free cash flow 47.5 70.6
Adjusted operating cash conversion
2025 2024
£m £m
Adjusted operating cash flow 88.6 115.5
Adjusted operating profit 114.3 129.0
Adjusted operating cash conversion 77.5% 89.5%
Free cash flow conversion
2025 2024
£m £m
Free cash flow 47.5 70.6
Adjusted operating profit 114.3 129.0
Free cash flow conversion 41.6% 54.7%
Adjusted tax charge
2025 2024
£m £m
Tax charge 19.1 7.7
Tax on amortisation of acquired intangibles 3.6 2.1
Tax on acquisition costs - 0.6
Tax on exceptional items 3.6 18.0
Adjusted tax charge 26.2 28.4
Adjusted tax rate
2025 2024
£m £m
Adjusted tax charge 26.2 28.4
Adjusted profit before taxation 105.2 119.5
Adjusted tax rate 24.9% 23.8%
Adjusted earnings and adjusted earnings per share
A detailed reconciliation is provided in note 5 of the consolidated financial
statements.
Net debt excluding lease liabilities
2025 2024
£m £m
Cash and bank balances 25.2 19.1
Bank overdrafts (included in borrowings) (0.8) (3.1)
Bank loans (included in borrowings) (129.2) (84.3)
Net debt excluding lease liabilities (104.8) (68.3)
Lease liabilities (60.8) (63.5)
Net debt (165.6) (131.8)
A reconciliation of movements in net debt excluding lease liabilities to Free
Cash Flow is included in the CFO report in the 2025 Annual report.
Return on capital employed (%)
2025
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Adjusted operating profit 57.6 73.7 (18.3) 113.0 1.3 114.3
Average capital employed 313.6 531.7 (62.9) 782.4 22.2 804.6
Return on capital employed (%) 18.4% 13.9% n/a 14.4% 5.8% 14.2%
2024 Restated
Specialist Technologies Precision Heat Treatment Central cost Total core Non-core Consolidated
and eliminations
£m £m £m £m £m £m
Adjusted operating profit 65.5 80.4 (20.4) 125.5 3.5 129.0
Average capital employed 308.0 530.4 (57.0) 781.4 41.5 822.9
Return on capital employed (%) 21.3% 15.2% n/a 16.1% 8.4% 15.7%
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